If you are thinking about starting a company, you are likely confusing the accounting department with the finance department. When in reality, both departments are unique in their specialized functions. Continue reading to learn why the accountancy department is necessary for an organization
Payroll expenses
The accountancy department will generate a check stub for each employee to maintain high morale, which is directly linked to earnings. The department will update the earnings too. Furthermore, they will also keep an extensive record of gross amounts vs. deductions. In addition, the department will also calculate employee bonuses and benefits.
They will ensure correct calculations and factor in vacation, absence, and sick leave. Moreover, the accountancy department is also responsible for calculating government taxes such as unemployment, social security, withholding, and FICA. In short, the department ensures the company complies.
Inventory management
Secondly, the accountancy department will also manage inventory costs. These expenses are common if the business owns warehouses and storehouses. The accountants will maintain a log of raw material purchases, overhead costs, and labor expenses. In addition, the department will also ensure that the product quality matches the raw material.
Businesses are purchasing different raw materials and machinery to accommodate the market. The company will buy on credit and via cash payments too. However, more significant assets, such as machinery, are based on loans. In addition, business liabilities are also observed.
Automation
The ledgers accountancy department supervises every interaction of goods and services. The department will record receipts from vendors, suppliers, and debtors. The accountants ensure every payment is made timely to avoid overpayment. In conclusion, they are excellent decision-makers.
Most accountancy departments will also introduce software into the operations. The automated capability will streamline operations and ensure that the departments are integrated. Therefore, introducing software ensures there are paper-intensive tasks. As a result, inefficiency is eliminated. The software will also strictly monitor hackers and other unwanted intruders.
Tracking cash movements
Besides the functions mentioned above, the accountancy department will also analyze expenses and track cash movement. The payments are added to the database and observed daily. When the payments are confirmed, the department will balance the checkbook.
The department will maintain a systematic record of all financial transactions. They will usually install software with the latest version and assistive features to eliminate human errors. Since there are many accountancy software available in the market, the company can make the best choice after matching their aims and expectation.
Creating a budget
Lastly, the accounts department will create, revise, and present the budget. They track expenses and transactions and hold the department head accountable if the funds are executed improperly. The accountants ensure other departments do not overspend their funds. As a result, they stay within the limited implemented by the community.
Monitoring budget movement will ensure correct cash management. Furthermore, statistics also help in the decision-making process. The evolutions are performed promptly and timely. Therefore, maintaining a budget increases internal performance.
The Bottom Line
The accounts department within every organization must have the ultimate grasp on the above concepts, so the resources are not wasted. They will keep inventory reports, financial control, and ensure legal compliance to avoid labor exploitation. As a result, the company’s efficiency and productivity are not threatened.
